Micropayments! A Tiny Rant
The December 4 episode of On The Media got me in a huff, yet again. They interviewed another media/newspaper professional. He spoke of "progress" developing a revenue stream for news in an era of collapsing papers. And he focused again on financial dogma dredged from the turn of the last century; revenue from advertisements and subscriptions.
I must be blunt. Both concepts must be ass-raped. Hard. With a 50 grit dildo.
I've already mentioned why paying for news with ads is bad. I'll be mentioning it again and again, I can assure everyone. In a nutshell, what happens to the intrepid reporter that stumbles upon the Story of the Century only to find the trail of evidence leads directly to the news outlet's chief advertiser? Those stories get squashed, or buried. Or the reporter gets fired. What ever way it happens, the story fails to become news. Large revenue sources become their own way of saying "Shut up." Trust me, this happens. I'll be mentioning a few actual instances where it happened to disastrous consequence in later posts.
That leaves subscriptions, which are hardly better. It's funny; before the demise of newspapers in general, it used to be possible to drop a quarter in a paper box and grab a paper. That was all it took. Now that the content is on the internet, why has no one found a mechanism to grab that quarter (or less, since the cost of printing no longer looms as overhead)? Nope. I have yet to hear of a paper or less-traditional news outlet that charges a few cents for an issue. One has to either cough up a year's subscription or just get it for free.
Either the reporters get paid, or the readers get pay-wall blocked.
It's no wonder why. Anyone who's tried to buy just about anything online has discovered how difficult it is to buy the equivalent of penny-candy in small amounts. I blame the online transaction process. The private interests that facilitate wealth transfer online have yet to get passed the Western Union model of wired transactions. The overhead involved with Visa, Mastercard, PayPal and the like are so onerous for both the retailer and the buyer that anything worth less than a buck cannot be bought, lest the transaction fees eat up more than half the monies transferred.
What we need is an online payment service or process (more on that distinction in a bit) that allows for fractions of a cent to go from a seller to a buyer. Why fractions? Think about a newspaper. Back in the day, I used to spend a quarter on the local daily. I would read (probably) half or more of the articles on average. Let's assume even a slow news day packed 15 stories of varying length into the front section alone. The Business, Sports (which I never read, but which was none-the-less available), Lifestyle and Classified sections all probably have the same amount. This makes (let's just say) 45 pieces of journalism available for two bits. Let's round that up to 50 and call it an average of 1/2 cent for each story.
A half a cent. PayPal is probably the cheapest money transfer service (of which I am familiar). They charge "1.9% to 2.9% + $0.30 USD" just to transfer money between PayPal subscribers. Try to use a service outside their proprietary boundaries and that amount grows. When one factors in bandwidth and server costs, this puts the cost per article well above 35 cents, a ten cent premium over the former price of the entire freakin' paper.
It's no wonder most papers give their content away and hope the magic unicorn of advertising will one day ride down the money rainbow to their rescue. Too bad Craig Newmark skewered and roasted that beast on its own horn years ago.
So, papers charge subscriptions. This inflates both the transaction and the product delivered, allowing the seller to more ably absorb the transaction costs. Trouble is, think about what that does to the common news reader.
Let's say you like to browse the general news from around the world. Let's say you see ten articles that interest you enough to buy them. Per year. If each article hails from a different outlet, you get to pay for ten yearly subscriptions for the privilege of reading ten articles. Yes, you have the option to read more. But you won't, and you shouldn't.
This must end. Let me be painfully clear, here, folks: For our democracy to survive, let alone thrive, we must find a way of monetizing investigative reporting once again.
I propose someone friggin' come up with a batch payment scheme. Those old paper boxes weren't emptied after each paper was sold, were they? Then why should the money transfer mechanism? Add up the half pennies here and there and settle the accounts weekly or monthly or whatever. In fact, the seller should be able to specify when they get paid. The more frequently the need their money, the greater the percentage charged for the service.
Also, we need one of two things: Either a clearing house or a common format.
A clearing house for micropayments will allow money from different services to be exchanged between providers like PayPal, Visa, AT&T, etc., without charge. Don't knock that last example. People in other countries have been sending money with their cell phones for years now. It's time the US got on the stick. After all, if I write a check drawing money from my X-Bank account, you shouldn't have to pay a premium simply because you bank at A-Bank. What banks have been doing for checks (and, for that matter, foreign currency), we should be able to so for electronic money.
Barring that, we should standardize all electronic payments. Screw that "let the market decide" mantra. Anyone who spouts that meaningless nonsense has never tried to borrow a cell phone charger. If the EU can do it for cell phones, we can do it for moving tiny amounts of money.
It's time.
Addendum, the Next Day: I was mulling this post at work today and had a thought (one most likely caused from the fasting I needed to do for a damned blood draw): Maybe the newspapers have got this all wrong.
I know, I know, that much should be obvious.
What I considered was not that newspapers are trapped in an old business model that just doesn't work today, but that maybe they shouldn't be looking outside their industry to deliver them from oblivion. That's what they're doing now.
For example, I've mentioned before how Amazon is trying to "save" papers and rape them financially in return. (Heck, I just realized I mentioned the micropayment thing there, too, in the comments.) That scheme seemed more than weighted to the builder.
Another story I heard from OTM referred to a service that would allow folks to contribute a monthly sum to a fund. Each time that user read a story he or she considered worthy, he would click on the donate button appended to the story. At the end of the month, the contribution would be equally divided between all the story publishers.
Two problems with this scheme. First, I should mention that the money was equally divided after 30% was taken by the scheme's architects. I found that too high a price. Secondly, the amount one contributed was constant no matter how many articles were clicked. Should someone go on vacation for a month, what would happen to the cash? That was never answered. Also, in news-heavy months, the amount each story got would be reduced proportionally. Consider a story that breaks, unleashing a flood of follow-up pieces from all manner of media. The initial author would in this case be the cause of his own proportional financial demise. That seemed kinda quirky.
I realized this morning that the papers shouldn't seek to outsource -- and profit from -- a job they could also do themselves.
Don't get me wrong; I'm not advocating here a single paper create a microfinance system just to keep themselves afloat. Not even the NYT is big enough to tackle that. I am saying that all of the papers together might be able to finance such a venture.
Banding together to provide the start-up capital and research would also reduce the profit expectations any outside venture might try to charge (like Amazon and those other guys). After all, the online system is not being created to transfer enormous funds and make a bunch of money through those transfers. It is being created to transfer small amounts of money to pay for products currently lost to profit altogether. Call the effort a move to reclaim money in a way that won't startle the reader.
After all, once started, this venture could fund their future.
I hope someone in the newspaper business reads this. And cares at least enough to consider it.
I must be blunt. Both concepts must be ass-raped. Hard. With a 50 grit dildo.
I've already mentioned why paying for news with ads is bad. I'll be mentioning it again and again, I can assure everyone. In a nutshell, what happens to the intrepid reporter that stumbles upon the Story of the Century only to find the trail of evidence leads directly to the news outlet's chief advertiser? Those stories get squashed, or buried. Or the reporter gets fired. What ever way it happens, the story fails to become news. Large revenue sources become their own way of saying "Shut up." Trust me, this happens. I'll be mentioning a few actual instances where it happened to disastrous consequence in later posts.
That leaves subscriptions, which are hardly better. It's funny; before the demise of newspapers in general, it used to be possible to drop a quarter in a paper box and grab a paper. That was all it took. Now that the content is on the internet, why has no one found a mechanism to grab that quarter (or less, since the cost of printing no longer looms as overhead)? Nope. I have yet to hear of a paper or less-traditional news outlet that charges a few cents for an issue. One has to either cough up a year's subscription or just get it for free.
Either the reporters get paid, or the readers get pay-wall blocked.
It's no wonder why. Anyone who's tried to buy just about anything online has discovered how difficult it is to buy the equivalent of penny-candy in small amounts. I blame the online transaction process. The private interests that facilitate wealth transfer online have yet to get passed the Western Union model of wired transactions. The overhead involved with Visa, Mastercard, PayPal and the like are so onerous for both the retailer and the buyer that anything worth less than a buck cannot be bought, lest the transaction fees eat up more than half the monies transferred.
What we need is an online payment service or process (more on that distinction in a bit) that allows for fractions of a cent to go from a seller to a buyer. Why fractions? Think about a newspaper. Back in the day, I used to spend a quarter on the local daily. I would read (probably) half or more of the articles on average. Let's assume even a slow news day packed 15 stories of varying length into the front section alone. The Business, Sports (which I never read, but which was none-the-less available), Lifestyle and Classified sections all probably have the same amount. This makes (let's just say) 45 pieces of journalism available for two bits. Let's round that up to 50 and call it an average of 1/2 cent for each story.
A half a cent. PayPal is probably the cheapest money transfer service (of which I am familiar). They charge "1.9% to 2.9% + $0.30 USD" just to transfer money between PayPal subscribers. Try to use a service outside their proprietary boundaries and that amount grows. When one factors in bandwidth and server costs, this puts the cost per article well above 35 cents, a ten cent premium over the former price of the entire freakin' paper.
It's no wonder most papers give their content away and hope the magic unicorn of advertising will one day ride down the money rainbow to their rescue. Too bad Craig Newmark skewered and roasted that beast on its own horn years ago.
So, papers charge subscriptions. This inflates both the transaction and the product delivered, allowing the seller to more ably absorb the transaction costs. Trouble is, think about what that does to the common news reader.
Let's say you like to browse the general news from around the world. Let's say you see ten articles that interest you enough to buy them. Per year. If each article hails from a different outlet, you get to pay for ten yearly subscriptions for the privilege of reading ten articles. Yes, you have the option to read more. But you won't, and you shouldn't.
This must end. Let me be painfully clear, here, folks: For our democracy to survive, let alone thrive, we must find a way of monetizing investigative reporting once again.
I propose someone friggin' come up with a batch payment scheme. Those old paper boxes weren't emptied after each paper was sold, were they? Then why should the money transfer mechanism? Add up the half pennies here and there and settle the accounts weekly or monthly or whatever. In fact, the seller should be able to specify when they get paid. The more frequently the need their money, the greater the percentage charged for the service.
Also, we need one of two things: Either a clearing house or a common format.
A clearing house for micropayments will allow money from different services to be exchanged between providers like PayPal, Visa, AT&T, etc., without charge. Don't knock that last example. People in other countries have been sending money with their cell phones for years now. It's time the US got on the stick. After all, if I write a check drawing money from my X-Bank account, you shouldn't have to pay a premium simply because you bank at A-Bank. What banks have been doing for checks (and, for that matter, foreign currency), we should be able to so for electronic money.
Barring that, we should standardize all electronic payments. Screw that "let the market decide" mantra. Anyone who spouts that meaningless nonsense has never tried to borrow a cell phone charger. If the EU can do it for cell phones, we can do it for moving tiny amounts of money.
It's time.
Addendum, the Next Day: I was mulling this post at work today and had a thought (one most likely caused from the fasting I needed to do for a damned blood draw): Maybe the newspapers have got this all wrong.
I know, I know, that much should be obvious.
What I considered was not that newspapers are trapped in an old business model that just doesn't work today, but that maybe they shouldn't be looking outside their industry to deliver them from oblivion. That's what they're doing now.
For example, I've mentioned before how Amazon is trying to "save" papers and rape them financially in return. (Heck, I just realized I mentioned the micropayment thing there, too, in the comments.) That scheme seemed more than weighted to the builder.
Another story I heard from OTM referred to a service that would allow folks to contribute a monthly sum to a fund. Each time that user read a story he or she considered worthy, he would click on the donate button appended to the story. At the end of the month, the contribution would be equally divided between all the story publishers.
Two problems with this scheme. First, I should mention that the money was equally divided after 30% was taken by the scheme's architects. I found that too high a price. Secondly, the amount one contributed was constant no matter how many articles were clicked. Should someone go on vacation for a month, what would happen to the cash? That was never answered. Also, in news-heavy months, the amount each story got would be reduced proportionally. Consider a story that breaks, unleashing a flood of follow-up pieces from all manner of media. The initial author would in this case be the cause of his own proportional financial demise. That seemed kinda quirky.
I realized this morning that the papers shouldn't seek to outsource -- and profit from -- a job they could also do themselves.
Don't get me wrong; I'm not advocating here a single paper create a microfinance system just to keep themselves afloat. Not even the NYT is big enough to tackle that. I am saying that all of the papers together might be able to finance such a venture.
Banding together to provide the start-up capital and research would also reduce the profit expectations any outside venture might try to charge (like Amazon and those other guys). After all, the online system is not being created to transfer enormous funds and make a bunch of money through those transfers. It is being created to transfer small amounts of money to pay for products currently lost to profit altogether. Call the effort a move to reclaim money in a way that won't startle the reader.
After all, once started, this venture could fund their future.
I hope someone in the newspaper business reads this. And cares at least enough to consider it.